In times of uncertainty, investors are drawn to gold as a safe haven. Many are investing in gold bullion coins and bars, either through a physical metals investment firm or an online retailer. Investing in precious metal is a smart move, but it’s important to research your choices and understand the pitfalls that can occur.
When it comes to purchasing gold, you’ll want to buy from a reputable gold dealer in Scranton with local expertise. Reputable dealers charge a markup to pay their staff and make a profit, but the percentage they add on top of the metal’s spot price is generally quite reasonable. For example, a dealer might charge as much as 10 percent over the melt value of a gold coin or bar. However, some gold IRA companies add far more to the actual cost of the coins and bars, according to allegations in lawsuits.
Some of these firms promote their products through misleading ads that play on people’s fears. They may discuss truly frightful developments in the world today, such as a declining dollar or the possibility of war with Iran. This creates a sense of urgency and pushes callers toward the idea of buying protection against Armageddon by investing in gold. They also promote inflated prices for their coins, which are advertised on right-wing radio and television shows, podcasts and newsletters.
Those who respond to these advertisements are often shocked to learn that their purchases of gold bullion coins have been sold at wildly inflated prices. One company openly advertises markups of thirty percent or more for standard gold bullion coins such as American Gold Eagles and Krugerrands. This is a significant amount above the two percent to seven percent markup that is typical of the industry, according to the Professional Numismatists Guild.
You also need to be aware of fees and commissions when investing in gold bullion, as these can significantly add to the overall cost of your purchase. For example, a dealer might charge an investment fee to buy and sell your bullion and a handling fee when you request delivery. Make sure to ask for these costs up front and compare them with those of other sellers to get the best deals on your investments.
Gold can be an excellent asset for diversifying your portfolio, but it’s best to limit your gold purchases to about 10% of your total investment portfolio. Too much can detract from income-producing assets and leave you vulnerable to the risks of inflation. In addition, the ability to liquidate your gold easily makes it a good hedge against volatile stocks and bonds.